Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 1 of 35 1 BARBARA J. PARKER (Bar No. 69722) bparker@oaklandcityattorney.org 2 MARIA BEE (Bar No. 167716) mbee@oaklandcityattorney.org 3 ERIN BERNSTEIN (Bar No. 231539) ebernstein@oaklandcityattorney.org 4 OAKLAND CITY ATTORNEY 5 One Frank Ogawa Plaza, 6th Floor Oakland, California 94612 6 Telephone: (510) 238-3601 Facsimile: (510) 238-6500 7 8 CLIFFORD H. PEARSON (Bar No. 108523) cpearson@pswlaw.com 9 DANIEL L. WARSHAW (Bar No. 185365) dwarshaw@pswlaw.com 10 MICHAEL H. PEARSON (Bar No. 277857) mpearson@pswlaw.com 11 MATTHEW A. PEARSON (Bar No. 291484) mapearson@pswlaw.com 12 PEARSON, SIMON & WARSHAW, LLP 13 15165 Ventura Boulevard, Suite 400 Sherman Oaks, California 91403 14 Telephone: (818) 788-8300 15 Facsimile: (818) 788-8104 JAMES W. QUINN (pro hac vice) jquinn@bafirm.com DAVID BERG (pro hac vice) dberg@bafirm.com MICHAEL M. FAY (pro hac vice) mfay@bafirm.com JENNY H. KIM (pro hac vice) jkim@bafirm.com CHRIS L. SPRENGLE (pro hac vice) csprengle@bafirm.com BRONWYN M. JAMES (pro hac vice) bjames@bafirm.com EMILY BURGESS (pro hac vice) eburgess@bafirm.com BERG & ANDROPHY 120 West 45th Street, 38th Floor New York, New York 10036 Telephone: (646) 766-0073 Facsimile: (646) 219-1977 16 [Additional Counsel Listed on Signature Page] 17 Attorneys for Plaintiff City of Oakland 18 UNITED STATES DISTRICT COURT 19 NORTHERN DISTRICT OF CALIFORNIA, SAN FRANCISCO DIVISION 20 CITY OF OAKLAND, Plaintiff, 21 v. 22 23 THE OAKLAND RAIDERS, A CALIFORNIA LIMITED PARTNERSHIP; ARIZONA 24 CARDINALS FOOTBALL CLUB LLC; ATLANTA FALCONS FOOTBALL CLUB, 25 LLC; BALTIMORE RAVENS LIMITED PARTNERSHIP; BUFFALO BILLS, LLC; 26 PANTHERS FOOTBALL, LLC; THE CHICAGO BEARS FOOTBALL CLUB, INC.; 27 CINCINNATI BENGALS, INC.; CLEVELAND BROWNS FOOTBALL 28 CASE NO. 3:18-cv-07444-JCS PLAINTIFF CITY OF OAKLAND’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Date: Time: Place: March 6, 2020 9:30 a.m. Courtroom G, 15th Floor Assigned to the Honorable Joseph C. Spero 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 2 of 35 COMPANY LLC; DALLAS COWBOYS 1 FOOTBALL CLUB, LTD.; PDB SPORTS, LTD.; THE DETROIT LIONS, INC.; GREEN 2 BAY PACKERS, INC.; HOUSTON NFL HOLDINGS, LP; INDIANAPOLIS COLTS, 3 INC.; JACKSONVILLE JAGUARS, LLC; KANSAS CITY CHIEFS FOOTBALL CLUB, 4 INC.; CHARGERS FOOTBALL COMPANY, LLC; THE RAMS FOOTBALL COMPANY, 5 LLC; MIAMI DOLPHINS, LTD.; MINNESOTA VIKINGS FOOTBALL, LLC; 6 NEW ENGLAND PATRIOTS LLC; NEW ORLEANS LOUISIANA SAINTS, LLC; NEW 7 YORK FOOTBALL GIANTS, INC.; NEW YORK JETS LLC; PHILADELPHIA EAGLES, 8 LLC; PITTSBURGH STEELERS LLC; FORTY NINERS FOOTBALL COMPANY 9 LLC; FOOTBALL NORTHWEST LLC; BUCCANEERS TEAM LLC; TENNESSEE 10 FOOTBALL, INC; PRO-FOOTBALL, INC.; and THE NATIONAL FOOTBALL LEAGUE, 11 Defendants. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 3 of 35 1 TABLE OF CONTENTS 2 Page 3 I. INTRODUCTION ..............................................................................................................................1 4 II. BACKGROUND ................................................................................................................................3 5 6 A. THE ORDER ..........................................................................................................................3 B. THE AMENDED COMPLAINT ...........................................................................................3 7 1. The 32-Team Cartel ....................................................................................................3 2. Oakland’s Standing And Injury ..................................................................................4 3. The Relocation Policies’ Purpose Is To Benefit Host Cities ......................................5 8 9 10 11 III. LEGAL ARGUMENT ........................................................................................................................5 12 A. STANDARD ON MOTION TO DISMISS ............................................................................5 13 B. OAKLAND HAS SUFFICIENTLY ALLEGED ANTITRUST CLAIMS ............................5 1. 14 Oakland Has Alleged Facts Sufficient To Demonstrate Standing ..............................5 15 (a) Defendants’ Anticompetitive Conduct Directly Injured Oakland ..................7 16 (b) Oakland Has Sufficiently Alleged Injury Arising From Defendants’ Anticompetitive Misconduct .........................................................................10 (c) Oakland Is A Proper Plaintiff Under The Sherman Act ...............................11 19 (d) Oakland’s Injuries Are Not “Indirect” ..........................................................13 20 (e) Oakland’s Damages Are Recoverable ..........................................................14 17 18 2. 21 Oakland Sufficiently Alleges A Section 1 Violation And A Relevant Market ........16 22 (a) Oakland Has Adequately Alleged A Market ................................................17 23 (b) Oakland Has Adequately Pled A Price-Fixing Scheme ................................18 24 (c) Oakland Has Adequately Alleged A Group Boycott ....................................20 25 C. 26 27 OAKLAND HAS SUFFICIENTLY ALLEGED A BREACH CLAIM ..............................20 1. The Relocation Policies Are Part Of An Enforceable Contract ................................21 2. Oakland Is A Third-Party Beneficiary To The Relocation Policies .........................22 28 i 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 4 of 35 3. 1 D. 2 3 IV. Oakland Has Alleged A Viable Claim Under The Relocation Policies....................25 OAKLAND’S UNJUST ENRICHMENT CLAIM IS SUFFICIENTLY PLED..................25 CONCLUSION .................................................................................................................................25 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ii 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 5 of 35 1 TABLE OF AUTHORITIES 2 3 4 5 Page(s) Cases Albert v. Postmates Inc., No. 18-cv-07592-JCS, 2019 WL 1045785 (N.D. Cal. Mar. 5, 2019)...................................................... 5 6 Amaral v. Cintas Corp. No. 2, 163 Cal. App. 4th 1157 (2008) .............................................................................................................. 21 7 Amarel v. Connell, 8 102 F.3d 1494 (9th Cir. 1996) ............................................................................................................... 13 9 Apple Inc. v. Pepper, 139 S. Ct. 1514 (2019) ............................................................................................................................. 6 10 11 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ................................................................................................................................. 5 12 Ass’n of Wash. Pub. Hosp. Dists. v. Philip Morris, Inc., 13 241 F.3d 696 (9th Cir. 2001) ................................................................................................................. 15 14 Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519 (1983) ................................................................................................................................. 5 15 16 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ................................................................................................................................. 5 17 Carpa, Inc. v. Ward Foods, Inc., 18 536 F.2d 39 (5th Cir. 1976) ................................................................................................................... 12 19 Cent. Telecomms., Inc. v. TCI Cablevision, Inc., 800 F.2d 711 (8th Cir. 1986) ................................................................................................................. 10 20 21 City of Rohnert Park v. Harris, 601 F.2d 1040 (9th Cir. 1979) ........................................................................................................ passim 22 City of San Jose v. Office of the Comm’r of Baseball, 23 No. C–13–02787 RMW, 2013 WL 5609346 (N.D. Cal. Oct. 11, 2013) ............................................. 7, 8 24 Deesen v. Prof’l Golfers’ Ass’n of Am., 358 F.2d 165 (9th Cir. 1966) ................................................................................................................. 19 25 26 Fine v. Barry & Enright Prods., 731 F.2d 1394 (9th Cir. 1984) ............................................................................................................... 10 27 Glen Holly Entm’t Inc. v. Tektronix Inc., 28 352 F.3d 367 (9th Cir. 2003) ................................................................................................................. 11 922705.1 iii 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 6 of 35 1 Goonewardene v. ADP, LLC, 434 P.3d 124 (Cal. 2019) ..................................................................................................... 22, 23, 24, 25 2 Hanover Shoe, Inc. v. United Shoe Mach. Corp., 3 392 U.S. 481 (1968) ............................................................................................................................... 15 4 Hawaii v. Standard Oil Co. of Calif., 405 U.S. 251 (1972) ................................................................................................................. 3, 6, 14, 15 5 6 Hawthorne v. Umpqua Bank, No. C–11–6700 YGR, 2012 WL 1458194 (N.D. Cal. Apr. 26, 2012) .................................................. 25 7 Hickcox-Huffman v. US Airways, Inc., 8 855 F.3d 1057 (9th Cir. 2017) ............................................................................................................... 25 9 Hicks v. PGA Tour, Inc., 897 F.3d 1109 (9th Cir. 2018) ............................................................................................................... 18 10 11 In re High Tech Emp. Antitrust Litig., 856 F. Supp. 2d 1103 (N.D. Cal. 2012) ................................................................................................. 16 12 Innovation Marine Protein, LLC v. Pac. Seafood Grp., 13 No. 6:17–cv–00815–MC, 2018 WL 1461501 (D. Or. Mar. 23, 2018) .................................................. 14 14 Jerrold Elecs. Corp. v. Westcoast Broad. Co., 341 F.2d 653 (9th Cir. 1965) ................................................................................................................. 12 15 16 Karseal Corp. v. Richfield Oil Corp., 221 F.2d 358 (9th Cir. 1955) ................................................................................................................. 15 17 Kendall v. Visa USA, Inc., 18 518 F.3d 1042 (9th Cir. 2008) ............................................................................................................... 16 19 Klamath Water Users Protective Ass’n v. Patterson, 204 F.3d 1206 (9th Cir. 1999) ............................................................................................................... 23 20 Ladas v. Cal. State Auto. Ass’n, 21 19 Cal. App. 4th 761 (1993) .................................................................................................................. 21 22 Los Angeles Memorial Coliseum Com’n v. National Football League, 726 F.2d 1381 (9th Cir. 1984) ..................................................................................................... 2, 14, 17 23 24 Los Angeles Memorial Coliseum Com’n v. National Football League, 791 F.2d 1356 (9th Cir. 1986) ....................................................................................................... 2, 5, 10 25 Martinez v. Socoma Cos., 26 521 P.2d 841 (Cal. 1974) ....................................................................................................................... 23 27 Maya v. Centex Corp., 658 F.3d 1060 (9th Cir. 2011) ............................................................................................................... 15 28 922705.1 iv 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 7 of 35 1 McNeary-Calloway v. JP Morgan Chase Bank, N.A., 863 F. Supp. 2d 928 (N.D. Cal. 2012) ................................................................................................... 25 2 Meridian Project Sys., Inc. v. Hardin Constr. Co., LLC, 3 No. Civ.S-04-2728FCDDAD, 2005 WL 2615523 (E.D. Cal. Oct. 14, 2005) ......................................... 9 4 Mid-S. Grizzlies v. NFL, 720 F.2d 772 (3d Cir. 1983)................................................................................................................... 19 5 6 Montreal Trading Ltd. v. Amax Inc., 661 F.2d 864 (10th Cir. 1981) ........................................................................................................... 6, 12 7 In re NCAA Student-Athlete Name & Likeness Lic. Litig., 8 990 F. Supp. 2d 996 (N.D. Cal. Oct. 25, 2013) ..................................................................................... 19 9 NCAA v. Bd. of Regents of Univ. of Okla., 468 U.S. 85 (1984) ........................................................................................................................... 11, 18 10 11 Newcal Indus., Inc. v. Ikon Office Solution, 513 F.3d 1038 (9th Cir. 2008) ......................................................................................................... 16, 17 12 Oakland Raiders v. NFL, 13 131 Cal. App. 4th 621 (2005) ................................................................................................................ 21 14 Oltz v. St. Peter’s Comm. Hosp., 19 F.3d 1312 (9th Cir. 1994) ................................................................................................................. 12 15 16 In re Packaged Seafood Prods. Antitrust Litig., 338 F. Supp. 3d. 1118 (S.D. Cal. 2018) ................................................................................................. 10 17 Parks v. Watson, 18 716 F.2d 646 (9th Cir. 1983) ................................................................................................................... 9 19 Provost v. Regents of Univ. of Cal., 135 Cal. Rptr. 3d 591 (Cal. Ct. App. 2011) ........................................................................................... 23 20 R.C. Dick Geothermal Corp. v. Thermogenics, 21 890 F.2d 139 (9th Cir. 1989) ................................................................................................................. 14 22 Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421 (9th Cir. 1995) ................................................................................................................... 9 23 24 Retrophin, Inc. v. Questcor Pharm., Inc., 41 F. Supp. 3d 906 (C.D. Cal. 2014) ..................................................................................................... 10 25 Reyes v. Saxon Mortg. Servs., 26 No. 09cv1366 DMS (WMC), 2009 WL 3738177 (S.D. Cal. Nov. 5, 2009) ......................................... 24 27 Saint Alphonsus Med. Ctr.-Nampa Inc. v. St. Luke’s Health Sys. Ltd., 778 F.3d 775 (9th Cir. 2015) ................................................................................................................. 18 28 922705.1 v 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 8 of 35 1 Schachar v. Amer. Acad. of Ophthalmology, Inc., 870 F.2d 397 (7th Cir. 1989) ................................................................................................................. 11 2 Seattle Totems Hockey Club, Inc. v. NHL, 3 783 F.2d 1347 (9th Cir. 1986) ............................................................................................................... 19 4 Spinks v. Equity Residential Briarwood Apartments, 171 Cal. App. 4th 1004 (2009) .............................................................................................................. 23 5 6 St. Louis Reg’l Convention and Sports Complex Auth. v. NFL, No. 1722-CC00976, 2017 WL 6885089 (Mo. Cir. Dec. 27, 2017) ....................................................... 21 7 St. Paul Fire Marine Ins. Co. v. Barry, 8 438 U.S. 531 (1978) ............................................................................................................................... 20 9 StubHub, Inc. v. Golden State Warriors, LLC, No. C 15-1436 MMC, 2015 WL 6755594 (N.D. Cal. Nov. 5, 2015) .................................................... 18 10 11 In re Sunday Ticket Antitrust Litig., 933 F.3d 1136 (9th Cir. Aug. 13, 2019) ............................................................................................ 2, 17 12 Tawfilis v. Allergan, Inc., 13 157 F. Supp. 3d 853 (C.D. Cal. 2015) ................................................................................................... 10 14 Tawfilis v. Allergan, Inc., No. 8:15-cv-00307-JLS-JCG, 2017 WL 3084275 (C.D. Cal. June 26, 2017) ....................................... 12 15 16 United States v. LSL Biotechnologies, 379 F.3d 672 (9th Cir. 2004) ................................................................................................................. 12 17 United States v. Microsoft Corp., 18 253 F.3d 34 (D.C. Cir. 2001) ................................................................................................................... 8 19 United States v. Realty Multi-List, Inc., 629 F.2d 1351 (5th Cir. 1980) ............................................................................................................... 19 20 United States v. Socony-Vacuum Oil Co., 21 310 U.S. 150 (1940) ............................................................................................................................... 19 22 US Airways, Inc. v. Sabre Holdings Corp., 105 F. Supp. 3d 265 (S.D.N.Y. 2015), aff’d in relevant part, 938 F.3d 43 (2d Cir. 2019) ..................... 8 23 24 Yount v. Salazar, No. CV11–8171–PCT DGC, 2013 WL 93372 (D. Ariz. Jan. 8, 2013) ................................................. 14 25 Other Authorities 26 27 15 U.S.C. § 15 .............................................................................................................................................. 12 28 Cal. Gov’t Code § 54222 ............................................................................................................................. 14 922705.1 vi 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 9 of 35 1 Fed. R. Civ. Proc. 8 ...................................................................................................................................... 25 2 Herbert Hovenkamp & Phillip E. Areeda, FUNDAMENTALS OF ANTITRUST LAW, § 22.04[a] (Supp. 2014)........................................................................................................................................... 19 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 vii 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 10 of 35 1 I. INTRODUCTION 2 On July 25, 2019, this Court dismissed the City of Oakland’s complaint (“Complaint”), with leave 3 to amend. Among other things, this Court held that Oakland failed to sufficiently allege that Defendants’ 4 restraint on the supply of professional football teams resulted in any anticompetitive injury to Oakland. 5 Oakland then filed the First Amended Complaint (“FAC,” ECF No. 68),1 addressing this holding and 6 providing significant factual detail about the history and economic structure of the NFL, how the NFL 7 uses its control over teams to constrain supply and drive hosting costs to supra-competitive levels, and 8 how Oakland was injured by this anticompetitive conduct. Describing it as an “extortion,” a “sabotage,” 9 and an “exploitation,” numerous economists have recognized that the NFL, as a “closed” sports league, 10 artificially restricts the supply of teams to force cities to make a Hobson’s Choice: pay Defendants’ 11 anticompetitive price or lose your team. In addition, the FAC alleges that a relocation decision – which directly impacts the significant 12 13 revenues that all NFL teams share – is a collective decision both economically and under the terms of the 14 NFL Constitution. As alleged in the FAC, the Raiders did not, as Defendants claim, “unilaterally” move 15 to Las Vegas. (FAC ¶¶ 22-23, 55, 66, 139-144). 16 The FAC also provides factual detail as to how the NFL accomplishes this anticompetitive 17 scheme: through insurmountable barriers to entry. No new team, and no new Host City, can ever exist 18 without permission from ¾ of the NFL Clubs, permission that Defendants contend they can deny for any 19 reason. Investors can build the best of teams – and a city can build the best of football stadiums, with 20 plenty of excited fans – but it is all for naught without the NFL’s unilateral blessing. Absent this restraint, 21 economists estimate that the market for professional football teams could easily accommodate at least 40 22 teams around the United States (as opposed to the existing 32). The FAC also alleges facts demonstrating that – in a bid to avoid antitrust liability and prevent 23 24 federal regulation – the NFL adopted the Relocation Policies specifically to benefit Host Cities like 25 Oakland and negotiated with a representative of Host Cities, the Mayors’ Conference, in doing so. This 26 Mayors’ Conference included the mayor of Oakland. 27 1 Capitalized terms not defined herein shall have the same meaning as in the FAC. 28 1 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 11 of 35 1 In their motion to dismiss (“MTD,” ECF No. 73), Defendants barely mention the FAC’s 2 significant economic analysis – or the NFL’s history with respect to the Relocation Policies – and, instead, 3 argue primarily that Oakland does not have standing to sue. Indeed, Defendants’ arguments, which defy 4 economic reality, interpret antitrust standing so narrowly that if this Court were to rule in their favor: (a) 5 the decisions in Los Angeles Memorial Coliseum Com’n v. National Football League, 726 F.2d 1381 (9th 6 Cir. 1984) (“Raiders I”) and Los Angeles Memorial Coliseum Com’n v. National Football League, 791 7 F.2d 1356 (9th Cir. 1986) (“Raiders II”) would effectively be overruled; and (b) as to issues of team 8 relocation and expansion, the NFL would forevermore have a de facto exemption from the antitrust laws. 9 However, the antitrust laws are not so narrowly defined, and Defendants’ cited standing cases 10 address concerns that do not arise in this case, e.g., the possibility of overlapping claims, an infinite 11 number of plaintiffs, or damages remote from the alleged misconduct. Here, Defendants’ misconduct 12 intentionally harmed a finite group of entities (Oakland, Alameda County (the “County”), and Las Vegas) 13 whose distinct injuries do not raise any possibility of overlapping claims, and Oakland is suing for 14 damages directly caused to its proprietary interest as a Host City.2 15 Defendants also contend that Oakland has no standing to sue under the contract formed by the 16 NFL Constitution and Relocation Policies. These arguments are made in striking contradiction to the facts 17 underlying the NFL’s adoption of the Relocation Policies, including its negotiations with the Mayors’ 18 Conference (of which Oakland’s mayor is a member). As discussed below, protecting the interests of 19 Host Cities was a primary motivating purpose for the adoption of the Relocation Policies. 20 In the end, Defendants’ motion to dismiss is unhinged from antitrust and contract law and in direct 21 defiance of the standard on a Rule 12(b)(6) motion. Oakland has plausibly alleged each of the elements 22 necessary for its claims, and Defendants’ motion to dismiss should be denied. 23 / / / 24 / / / 25 2 Defendants also argue that Oakland has failed to allege a market or a substantive claim under the 26 Sherman Act, but these contentions fail to consider: (a) the Ninth Circuit’s pronouncement on pleading the elements of Section 1 claims; and (b) the Ninth Circuit’s findings in Raiders I and Raiders II and, 27 more recently, in In re Sunday Ticket Antitrust Litig. (“In re Sunday Ticket”), 933 F.3d 1136 (9th Cir. Aug. 13, 2019), regarding the NFL and markets. (See infra Section III.B.2). 28 922705.1 2 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 12 of 35 1 II. BACKGROUND 2 A. 3 In its July 25, 2019 Order (“Order,” ECF No. 64), this Court held that, to the extent Oakland was THE ORDER 4 claiming antitrust standing and injury arising from the NFL’s 32-team structure, the Complaint did not 5 sufficiently allege facts to support that claim. However, this Court granted Oakland leave to amend, 6 finding it was “possible” and “conceivable” that Oakland could “plausibly allege” such a claim. (Id. at 7 18). In discussing the 32-team structure, this Court also provided “an incomplete list of issues that might 8 be relevant,” including whether owners existed willing to start new football teams and whether any teams 9 were willing to play at the Coliseum property. (Id. at 15-18). 10 In addition, this Court offered Oakland guidance as to other issues. With respect to damages, this 11 Court stated that Oakland had failed to respond to the decision in City of Rohnert Park v. Harris 12 (“Rohnert Park”), 601 F.2d 1040 (9th Cir. 1979). This Court also stated that Oakland could not recover 13 damages “based on lost tax revenue from the broader scope of economic activity” based on the Supreme 14 Court’s holding in Hawaii v. Standard Oil Co. of Calif., 405 U.S. 251 (1972). This Court then questioned 15 Oakland’s diminution of value claim and recommended that Oakland consider Defendants’ arguments 16 regarding the relevant market. (Order at 20-24). As to Oakland’s contract claims for breach of the Relocation Policies, this Court held that 17 18 Oakland’s allegations failed to demonstrate that Defendants’ motivating purpose in adopting the 19 Relocation Policies was to provide a benefit to Host Cities like Oakland. (Id. at 26-28). 20 As demonstrated below, the FAC has adequately addressed the issues raised in the Order. 21 B. 22 THE AMENDED COMPLAINT 1. 23 The 32-Team Cartel In response to the Order, Oakland added significant additional facts to its FAC. First, Oakland 24 included detailed facts and economic analyses regarding the “closed” sports leagues in the United States 25 in general and the NFL’s closed structure specifically. These facts and analyses explain that through an 26 artificial restraint on the supply of professional football teams – and an extraordinary level of revenue 27 sharing – Defendants have created a professional football market that defies basic competitive principles. 28 (FAC ¶¶ 1-16, 36-56). 3 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 13 of 35 1 The FAC also explains why the NFL constrains the supply of football teams: to support 2 anticompetitive pricing in the hosting market. As numerous economists have recognized, the NFL and 3 similar “closed” sports leagues restrict the supply of teams to ensure that cities with the potential to host a 4 professional sports team – but remain without one – exist. This preservation of cities without teams gives 5 Defendants a real relocation threat when negotiating for stadiums and other benefits with existing Host 6 Cities, allowing them to demand supra-competitive prices. (Id. ¶¶ 45, 47, 54, 57-69). 7 2. 8 Oakland’s Standing And Injury The FAC demonstrates that Oakland engaged in extraordinary efforts to keep the Raiders from 9 relocating, including offering viable plans to renovate the existing Coliseum property – offers that 10 necessarily involved paying a supra-competitive price for the ability to continue hosting the Raiders. (Id. 11 ¶¶ 105-138). Defendants rejected these offers without truly considering them because Defendants knew 12 that relocation to Las Vegas would result in even greater supra-competitive revenue to be shared by 13 Defendants. (Id. ¶¶ 123, 128-129, 134-136). Both Las Vegas and Oakland were losers – Las Vegas 14 because it was forced to pay a supra-competitive price to host the Raiders and Oakland because it was 15 unable to pay that exorbitant price and thereby lost its status as a Host City. The winners? Defendants. 16 Oakland’s relocation to Las Vegas doubled the Raiders’ enterprise value, resulted in a $378 million 17 relocation fee to be shared by Defendants, and will result in additional supra-competitive revenue that will 18 be shared by Defendants, including, but not limited to, television rights in a new territory and new 19 intellectual property rights. (Id. ¶¶ 24, 56, 66). In a competitive market – one without Defendants’ barriers to entry and market-distorting revenue 20 21 sharing – the Raiders would have stayed in Oakland or, at the very least, Oakland could have attracted 22 another team to its new or renovated stadium as the “highest rated city for NFL expansion.” (Id. ¶ 138; 23 see also id. ¶¶ 47-49, 55-56, 127). Oakland also: (a) alleges in detail how Defendants’ restraint of the supply of teams – and use of 24 25 that restraint to wield their relocation threat and collect supra-competitive prices – directly and 26 intentionally harmed Oakland and caused Oakland to incur significant losses; and (b) distinguishes the 27 decision in Rohnert Park. (Id. ¶¶ 200-217). 28 / / / 4 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 14 of 35 1 3. 2 The Relocation Policies’ Purpose Is To Benefit Host Cities The FAC demonstrates that the Relocation Policies are part of a valid, binding contract 3 enforceable against the NFL and the 32 NFL Clubs. (Id. ¶¶ 87-92). The FAC also provides detailed 4 factual allegations about how the Relocation Policies were created – first from a proposed federal statute 5 meant to protect the interests of Host Cities, and second from a “Statement of Principles” that the NFL 6 negotiated with the Mayors’ Conference, a Host City representative of which Oakland is a member. (Id. 7 ¶¶ 70-86). These facts demonstrate that a motivating purpose for the Relocation Policies was to provide a 8 benefit to Host Cities, including Oakland. (See infra Section III.C.2). 9 III. LEGAL ARGUMENT 10 A. STANDARD ON MOTION TO DISMISS 11 “Generally, a plaintiff’s burden at the pleading stage is relatively light.” Albert v. Postmates Inc., 12 No. 18-cv-07592-JCS, 2019 WL 1045785, at *3 (N.D. Cal. Mar. 5, 2019) (Spero, J.). To survive such a 13 motion, a plaintiff need only allege “enough facts to state a claim to relief that is plausible on its face.” 14 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Under this “plausibility standard,” a plaintiff must 15 allege facts that add up to “more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft 16 v. Iqbal, 556 U.S. 662, 678 (2009). 17 B. 18 OAKLAND HAS SUFFICIENTLY ALLEGED ANTITRUST CLAIMS 1. 19 Oakland Has Alleged Facts Sufficient To Demonstrate Standing In the first two sections of their brief, Defendants argue that Oakland, as a Host City that lost an 20 NFL Club, does not have standing to sue under the antitrust laws. Defendants’ arguments, taken together, 21 would mean that no private party could ever enforce the Sherman Act for what economists have labeled 22 the economic “extortion,” “sabotage,” and “exploitation” involved in Defendants’ collective relocation 23 threats. (See, e.g., FAC ¶¶ 47, 54, 62, 68). 24 As this Court recognized in the Order, antitrust standing is governed by the factors discussed in 25 Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519 (1983). 26 (Order at 14-15). See also Raiders II, 791 F.2d at 1363. In the FAC, Oakland has alleged facts 27 demonstrating each of the Associated Gen. Contractors factors: 28 / / / 5 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 15 of 35 1  Defendants intentionally acted to harm Oakland through a collective scheme to demand supracompetitive pricing for hosting the Raiders and a punitive boycott when Oakland failed to pay those prices (see FAC ¶¶ 36-69, 105-138);  Oakland’s injuries were directly caused by Defendants’ anticompetitive scheme and are exactly what the antitrust laws are meant to prevent (id. ¶¶ 139-151, 197-217); and, thus,  A direct causal connection exists between the alleged conduct and injury (see id.; see also ¶¶ 10, 27), there is no abstract speculation about the injury (see id. ¶¶ 144, 151, 199-206, 211, 217), and there is no risk of duplicate recoveries (since Oakland, as a market participant in this case, is the victim of this antitrust injury (id. ¶¶ 105-138, 197-217)). 2 3 4 5 6 7 Nonetheless, Defendants raise a number of issues based primarily on: Hawaii, 405 U.S. at 264- 8 9 265; Montreal Trading Ltd. v. Amax Inc. (“Montreal Trading”), 661 F.2d 864, 867-868 (10th Cir. 1981); 10 and Rohnert Park, 601 F.2d at 1042-1045. These decisions address proximate cause, foreseeability, and 11 remoteness, reoccurring themes in both antitrust and tort law. Specifically, these decisions address issues 12 regarding overlapping, potentially infinite, or overly remote claims. There are no such issues here. As the FAC alleges, Defendants’ anticompetitive conduct was 13 14 directed at, and meant to punish, Oakland in its proprietary capacity as an owner of the Coliseum property 15 and Host City of the Raiders. Further, Defendants’ anticompetitive conduct injured a limited number of 16 parties (i.e., Oakland, the County, and Las Vegas), and the damages suffered by those parties are not even 17 theoretically overlapping. Indeed, if Defendants’ arguments were to prevail, Defendants’ anticompetitive 18 conduct with respect to both team expansion and relocation would be effectively exempt from the antitrust 19 laws since Defendants contend no Host City or surrounding area (i.e., county), current or prospective, can 20 sue them. Further, the Ninth Circuit’s holdings in Raiders I and Raiders II would be effectively overruled. Defendants’ mischaracterization of the antitrust laws is based on arguments that are detached from 21 22 economic reality. As the Supreme Court recently recognized in Apple Inc. v. Pepper, antitrust defendants 23 should not be allowed to “gerrymander” their way out of liability with arguments that “do[] not make a lot 24 of sense.” 139 S. Ct. 1514, 1522 (2019). Congress has denied Defendants an antitrust exemption for their 25 relocation activities and left in place the system by which injured parties, like Oakland, can commence 26 antitrust actions for those activities. Defendants should not be allowed to manufacture a de facto 27 exemption where Congress has declined to create one. 28 / / / 6 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 16 of 35 1 2 (a) Defendants’ Anticompetitive Conduct Directly Injured Oakland Defendants first argue that Oakland has not alleged antitrust standing because it supposedly does 3 not have any “injury-in-fact,” citing the decision in Rohnert Park. (MTD at 7-8). However, it is clear 4 Rohnert Park is factually distinguishable from this action. 5 In Rohnert Park, the City of Rohnert Park, in an effort to develop a regional shopping center, 6 designated certain city land as a commercial zone suitable for development. Rohnert Park owned two 7 parcels within that commercial zone. Defendants constructed a shopping center in the neighboring town 8 of Santa Rosa and Rohnert Park sued, alleging, among other things, antitrust violations under Sections 1 9 and 2 of the Sherman Act based on defendants’ “attempt to monopolize retail merchandise space in the 10 Santa Rosa trade area.” 601 F.2d at 1042-1043. 11 The Ninth Circuit first held that Rohnert Park could not sue as parens patriae “on behalf of its 12 property owners, taxpayers, and inhabitants” for their losses “if the [shopping] center is not built in 13 Rohnert Park.” Id. at 1044. The Ninth Circuit then held that Rohnert Park’s alternative argument – that it 14 had a proprietary interest in a specific portion of the commercial zone – failed to allege a cognizable 15 injury because damages were speculative (i.e., it was not clear that Rohnert Park’s specific portion of land 16 could even be used for a shopping center). Id. at 1044-1045. The court held that Rohnert Park, under 17 Article III standing considerations, did not “ma[k]e a sufficient showing that, absent the alleged antitrust 18 violations . . ., its commercial area would have been selected as a site for shopping center development.” 19 Id. at 1045. 20 This case, unlike Rohnert Park, does not involve speculation. Oakland owns the Coliseum 21 property and Defendants have, through their prior conduct, shown that the Coliseum is an appropriate 22 home stadium in which to play football. Indeed, the Raiders have played in the Coliseum for decades and 23 have chosen to renew the lease and continue playing at the Coliseum until their new stadium in Las Vegas 24 is ready. Further, as detailed in the FAC, a recent economic analysis demonstrates that if the NFL were to 25 end its anticompetitive restraint on the supply of new professional football teams, the most suitable city 26 for a new team in the United States would be Oakland. (FAC ¶ 138). 27 The decision in City of San Jose v. Office of the Comm’r of Baseball (“San Jose”), No. C–13– 28 02787 RMW, 2013 WL 5609346 (N.D. Cal. Oct. 11, 2013) is illustrative here. Although the San Jose 922705.1 7 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 17 of 35 1 court ultimately dismissed that action based on baseball’s unique antitrust exemption, before doing so, it 2 distinguished Rohnert Park: 3 Unlike in Rohnert Park, where the city’s property interest was speculative, here, the complaint alleges that the City of San José owns the parcels of land set aside for the A’s Stadium pursuant to the Option Agreement (the “Diridon land”). Also unlike in Rohnert Park, where there was no indication that the Rohnert Park [land] would have been selected for the urban renewal project but for some antitrust violation, here, the A’s have already selected the Diridon land as the prospective site for a new stadium. 4 5 6 7 Id. at *12 (citation and footnote omitted). Again, as in San Jose, Oakland owns the Coliseum property 8 and that property has historically served – and, in fact, still serves – as a venue for professional football. 9 Under Defendants’ analysis: (a) even if the commercial area in Rohnert Park had a history of hosting 10 shopping centers – and was hosting a shopping center as the case was in progress – proximate cause 11 would still be lacking; and (b) Defendants’ own anticompetitive behavior in erecting barriers to entry, and 12 refusing to deal with Oakland, would preclude any showing of proximate cause (i.e., you can’t show that 13 another team would play in the Coliseum because we have not allowed another team to join the NFL in 14 over twenty years). These arguments are circular, economically irrational, and contrary to the purpose of 15 the antitrust laws. Indeed, the “argument that [an antitrust plaintiff] needs to point to a specific ‘dead body’ in order 16 17 to show that barriers to entry exist is incorrect, and equivalent to saying that a [defendant] will be immune 18 from antitrust scrutiny if it can erect sufficiently high barriers to entry.” US Airways, Inc. v. Sabre 19 Holdings Corp., 105 F. Supp. 3d 265, 282 (S.D.N.Y. 2015), aff’d in relevant part, 938 F.3d 43 (2d Cir. 20 2019). In other words, Defendants cannot rely on their anticompetitive refusal to allow a single new team 21 to join the NFL in over twenty years to deny Oakland antitrust standing. See also United States v. 22 Microsoft Corp., 253 F.3d 34, 79 (D.C. Cir. 2001) (requiring antitrust “liability [to] turn on a plaintiff’s 23 ability or inability to reconstruct the hypothetical marketplace absent a defendant’s anticompetitive 24 conduct would only encourage monopolists to take more and earlier anticompetitive action”). No rational 25 investor or city would put together a team or build a football stadium without Defendants’ prior approval 26 because Defendants have created almost insurmountable barriers to entry by, among other things, 27 requiring a ¾ vote of NFL owners to approve a new team. 28 / / / 8 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 18 of 35 1 When this Court posed its questions about potential alternative football teams in the Order, 2 Oakland had not pleaded the factual details of the significant barriers to entry that Defendants have 3 erected. However, as the FAC now alleges, unlike just about any other market in this country, entry into 4 the NFL does not and cannot occur unless the proposed new NFL team’s competitors vote to allow it, 5 permission Defendants claim they can deny for any reason. (MTD at 16). The Ninth Circuit has 6 recognized that in antitrust cases based on barriers to entry, plaintiffs are required to demonstrate those 7 barriers to entry and their impact, which the FAC sufficiently does here. See Rebel Oil Co. v. Atl. 8 Richfield Co., 51 F.3d 1421, 1439 (9th Cir. 1995) (entry barriers include “factors in the market that deter 9 entry while permitting incumbent firms to earn monopoly returns”); see also Meridian Project Sys., Inc. v. 10 Hardin Constr. Co., LLC, No. Civ.S-04-2728FCDDAD, 2005 WL 2615523, at *6 (E.D. Cal. Oct. 14, 11 2005) (finding plaintiffs stated an antitrust claim based on “significant barriers” that demonstrated “a 12 dangerous probability of achieving monopoly power”). Defendants cite no case that requires plaintiffs to 13 identify specific entities that would compete if barriers to entry did not exist because there are none. 14 Further, to the extent that Defendants are somehow arguing that Oakland is a potential new entrant 15 into the Host City market, and thus, can only allege injury-in-fact with “an[] allegation that a team 16 unsuccessfully sought to join the NFL,” Defendants are again wrong. (MTD at 7). In fact, the Ninth 17 Circuit has held that a “potential new entrant[] into a market . . . ‘who has taken substantial demonstrable 18 steps to enter an industry and who is thwarted in that purpose by antitrust violations, has suffered a 19 possible ascertainable loss.’” Parks v. Watson, 716 F.2d 646, 659-660 (9th Cir. 1983) (quoting Solinger v. 20 A&M Records, Inc., 586 F.2d 1304, 1309 (9th Cir. 1976)). (See also Order at 15). In determining 21 whether a plaintiff has taken such steps, the Ninth Circuit has applied the “intention and preparedness” 22 test, which focuses on the following four factors: 23 24 25 26 1. 2. 3. 4. The background and experience of plaintiff in his prospective business…. Affirmative action on the part of plaintiff to engage in the proposed business…. The ability of plaintiff to finance the business and the purchase of equipment and facilities necessary to engage in the business…. The consummation of contracts by plaintiff…. 27 Id. (noting that “the four Solinger factors are neither exclusive nor necessarily applicable in every case”). 28 Here, Oakland easily satisfies all four factors as it currently serves – and has served for nearly 60 years – 922705.1 9 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 19 of 35 1 as a Host City to the Raiders (FAC ¶ 94). See Tawfilis v. Allergan, Inc., 157 F. Supp. 3d 853, 866-868 2 (C.D. Cal. 2015); Fine v. Barry & Enright Prods., 731 F.2d 1394, 1397 (9th Cir. 1984) (finding “actual 3 participation . . . is equivalent to ‘consummation of contracts’”); Retrophin, Inc. v. Questcor Pharm., Inc., 4 41 F. Supp. 3d 906, 915 (C.D. Cal. 2014). Because Oakland “had experience and expertise” as a Host 5 City, “had raised . . . capital” and “secured financing commitments” of additional capital, “submitted 6 detailed feasible plans,” and secured the support of Mayor Schaaf for those plans (FAC ¶¶ 128, 130-131), 7 Oakland has adequately alleged that it has suffered an antitrust injury even if Oakland is viewed as a 8 prospective “new” entrant. Cent. Telecomms., Inc. v. TCI Cablevision, Inc., 800 F.2d 711, 729 (8th Cir. 9 1986). 10 “Antitrust claims must make economic sense.” In re Packaged Seafood Prods. Antitrust Litig., 11 338 F. Supp. 3d. 1118, 1178 (S.D. Cal. 2018) (quoting Adaptive Power Sols., LLC v. Hughes Missile Sys. 12 Co., 141 F.3d 947, 952 (9th Cir. 1998)). And so should antitrust defenses. It defies economic sense that 13 anyone would incur the enormous cost of building a professional team to play in the NFL when there is no 14 real chance that Defendants will agree to allow that team to play in the NFL. In over fifty years – while 15 the United States population has grown substantially and the number of cities capable of hosting an NFL 16 team has tripled – the NFL has allowed only four new teams, and no new team has been allowed to join 17 the NFL in over twenty years. (FAC ¶¶ 9, 67). Oakland has alleged these and other facts demonstrating: 18 (a) Defendants have used their market power to erect enormous barriers to entry; and (b) that without 19 those barriers, market forces would result in additional teams available to play in cities, like Oakland, 20 seeking to host NFL teams. (Id. ¶¶ 42-49, 57, 127, 197-199). These plausible allegations are sufficient to 21 establish antitrust standing. 22 23 24 (b) Oakland Has Sufficiently Alleged Injury Arising From Defendants’ Anticompetitive Misconduct Defendants next argue that since Oakland tried to get the Raiders to stay, “competition” 25 supposedly took place (MTD at 8), once again citing Raiders II for the proposition that antitrust injury 26 requires “a showing that the injury was caused by a reduction, rather than increase, in competition flowing 27 from the defendant’s acts.” 791 F.2d at 1364. By Defendants’ reasoning, if the manufacturers of asthma 28 inhalers colluded to restrain the supply of inhalers and then auctioned them off to desperate asthma 922705.1 10 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 20 of 35 1 sufferers for the highest price, there would be no anticompetitive activity because all those sufferers would 2 be “competing” for the precious few inhalers. Creating a bidding war by artificially restricting output is 3 not competition. Rather, as noted by the Supreme Court, “a restraint that has the effect of reducing the importance 4 5 of consumer preference in setting price and output is not consistent with th[e] fundamental goal of 6 antitrust law. Restrictions on price and output are the paradigmatic examples of restraints of trade that the 7 Sherman Act was intended to prohibit.” NCAA v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 107 8 (1984). Here, as detailed in the FAC, Defendants artificially constrain the supply of NFL teams, which 9 forces Host Cities to pay supra-competitive prices to keep their NFL team or lose their ability to host that 10 (or any other) team. (FAC ¶¶ 36-69, 105-138). Antitrust law condemns such “reductions in output that 11 drive up prices as consumers bid for the remaining supply,” Schachar v. Amer. Acad. of Ophthalmology, 12 Inc., 870 F.2d 397, 399 (7th Cir. 1989), and to argue that such bidding is the equivalent of competition is 13 truly a perversion of antitrust law. The Ninth Circuit has defined five elements of “antitrust injury”: “(1) unlawful conduct, (2) 14 15 causing an injury to the plaintiff, (3) that flows from that which makes the conduct unlawful, . . . (4) that is 16 of the type the antitrust laws were intended to prevent,” and (5) that involves a plaintiff who is a 17 “participant in the same market as the alleged malefactors.” Glen Holly Entm’t Inc. v. Tektronix Inc., 352 18 F.3d 367, 372 (9th Cir. 2003) (quotations and citations omitted). As to the last of these elements, “the 19 party alleging the injury must be either a consumer of the alleged violator’s goods or services or a 20 competitor of the alleged violator in the restrained market.” Id. (quotations and citation omitted). Here, 21 Oakland has alleged in detail how Defendants use their cartel-like control of professional football teams to 22 constrain the supply of those teams, force Host Cities to pay supra-competitive prices for hosting rights, 23 and boycott Host Cities which fail to pay. (FAC ¶¶ 36-69, 105-138). These plausible allegations more 24 than sufficiently plead antitrust injury. 25 (c) 26 Oakland Is A Proper Plaintiff Under The Sherman Act Defendants next argue that Oakland cannot allege standing because the antitrust laws limit 27 damages to when a party has paid a supra-competitive price. (MTD at 9-10). Defendants are wrong. 28 / / / 11 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 21 of 35 1 Damages recoverable under the antitrust laws are, in part, defined, by principles of proximate 2 cause, see, e.g., United States v. LSL Biotechnologies, 379 F.3d 672, 693-694 (9th Cir. 2004), and can 3 include injuries to a plaintiff’s “business or property.” 15 U.S.C. § 15. Accordingly, antitrust damages 4 can and do include injury to an existing business (i.e., Oakland’s business as a Host City), including lost 5 investment amounts. See Carpa, Inc. v. Ward Foods, Inc., 536 F.2d 39, 51 (5th Cir. 1976); Jerrold Elecs. 6 Corp. v. Westcoast Broad. Co., 341 F.2d 653, 665 (9th Cir. 1965). Indeed, when antitrust activity puts a 7 plaintiff, like Oakland, out of business as a Host City, the plaintiff can sue for “all damages resulting from 8 the destruction of [its] business.” Oltz v. St. Peter’s Comm. Hosp., 19 F.3d 1312, 1314 (9th Cir. 1994). Defendants’ reliance on Montreal Trading is misplaced.3 Concerned about the directness of 9 10 alleged injury, Montreal Trading sought to draw a line as to which parties can claim antitrust injury when 11 a purchase is not made. In that case, the Tenth Circuit held that an antitrust plaintiff lacks standing where 12 it sues based on goods it never purchased, where the plaintiff “has no prior course of dealing with any 13 defendant” because “a seemingly unlimited number of plaintiffs could assert a virtually unlimited quantity 14 of lost purchases,” and courts would be unsure about “whether the purchase would have been made from 15 one of the conspirators or from one of their competitors; what quantity would have been purchased; what 16 price would have been paid; and at what price resale would have occurred.” 661 F.2d at 868. The court 17 recognized, however, that where, as here, a prior course of dealing exists between plaintiff and defendant, 18 injuries are not “inherently speculative.” Id. The FAC pleads Oakland’s long and intricate course of dealing and business relationship with 19 20 Defendants. (FAC ¶¶ 93-138). Given this relationship, there is no specter of an “unlimited number of 21 plaintiffs,” and indeed, as alleged in the FAC, Defendants have directly injured a very limited number of 22 Plaintiffs (i.e., Oakland, the County, and Las Vegas). (Id. ¶¶ 16, 133, 191). Further, this relationship – 23 which was only cut short by Defendants’ anticompetitive conduct – alleviates any concern over the 24 “uncertainties” enumerated by the Montreal Trading court. (Compare 661 F.2d at 868, with FAC ¶¶ 9325 94, 130-132). Oakland also alleges that Defendants’ anticompetitive conduct was directed specifically at 26 3 Defendants also misleadingly cite Tawfilis v. Allergan, Inc., No. 8:15-cv-00307-JLS-JCG, 2017 WL 3084275 (C.D. Cal. June 26, 2017), which only discusses Montreal Trading in granting class certification. 27 Coincidentally, an earlier decision in that same case found plaintiff had suffered antitrust injury. (See supra Section III.B.1(a)). 28 922705.1 12 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 22 of 35 1 Oakland, was meant to punish Oakland, and amounted to a concerted refusal to deal and/or group boycott. 2 (See FAC ¶¶ 140-144, 220-222). These allegations are sufficient at the pleading stage. See Amarel v. 3 Connell, 102 F.3d 1494, 1512 (9th Cir. 1996) (“[F]or purposes of standing analysis, the antitrust laws are 4 concerned with the effect on direct victims of boycotts…”). 5 (d) Oakland’s Injuries Are Not “Indirect” Next, Defendants argue that Oakland – a Host City with which Defendants directly negotiated – 6 7 has injuries that are too “indirect” to bring an antitrust action. (MTD at 10-12). This remarkable 8 contention raises the question, who suffered the direct injury? According to Defendants, as to Host Cities 9 and relocation decisions, nobody.4 Defendants first contend that any injury to Oakland is “derivative” of the injury to the hypothetical 10 11 team or teams that Defendants will not allow to play in the NFL. (Id. at 10). Pushed to its illogical end, 12 Defendants’ argument would overrule every consumer price-fixing case based on barriers to entry since 13 those consumers would supposedly have “indirect” injuries, “derivative” of the hypothetical suppliers who 14 cannot enter the market. In short, Defendants’ argument is absurd, and Defendants provide no relevant 15 authority to support it. Oakland’s injuries were the direct result of Defendants’ anticompetitive conduct. 16 Second, ignoring the specific allegations of the FAC (see ¶¶ 105-138, 200-217), Defendants 17 engage in what can only be described as factual conjecture over whether Oakland is really an owner of the 18 Coliseum property, or whether, just possibly, the Authority should be the plaintiff here, or maybe the 19 proposals that Oakland made to keep the Raiders at the Coliseum were too “speculative.” Defendants 20 even resort to citing a document beyond the face of the FAC – a “term sheet” – for the proposition that 21 somehow, under some potential factual scenario, Oakland’s Coliseum proposals might not have been 22 viable or Oakland’s contribution to that proposal insignificant. (MTD at 11, n.7). These are, at most, 23 factual issues for trial, not grounds for a Rule 12(b)(6) motion.5 24 4 To the extent Defendants attempt to argue that the Authority is the “better” plaintiff, Defendants’ argument must fail. (See MTD at 10-11). “Although the Authority manages the Coliseum site for 26 Oakland, Oakland is the entity with the economic interest in that site and, accordingly, is the entity that suffers from losses related to that site.” (FAC ¶ 217). 27 5 Further, Defendants mischaracterize a now settled litigation (MTD at 11), which was not about who owns the Coliseum property, but rather about whether one of the owners, the County, could sell its interest 28 922705.1 13 3:18-cv-07444-JCS 25 PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 23 of 35 1 Lastly, Defendants retreat to their already rejected argument that “landlords” can never sue for 2 antitrust liability. (MTD at 11-12; Order at 19-20). First, although a landlord-tenant paradigm might be 3 of some use here, Oakland is not a landlord in the traditional sense. As the FAC alleges repeatedly, a 4 market for Host Cities exists, and the relationship between a Host City and the hosted football team is 5 much more complex than that of a landlord and tenant. (See FAC ¶¶ 57-86, 188-196). See also Raiders I, 6 726 F.2d at 1394. In fact, Defendants try to force Oakland into a landlord/tenant box so that they can 7 falsely contend that only “rents” are at issue here.6 Oakland’s fulsome allegations regarding its damages 8 (FAC ¶¶ 200-217) make clear that Oakland has suffered far more than “[m]ere injury as a landlord or 9 lessor.” R.C. Dick Geothermal Corp., 890 F.2d at 148. 10 11 (e) Oakland’s Damages Are Recoverable Defendants next argue that between the decision in Rohnert Park and the Supreme Court’s 12 decision in Hawaii, a spurned Host City like Oakland has no damages that it can recover. (MTD at 1213 14). As demonstrated above, Defendants misconstrue Rohnert Park (supra at 6-8), and Hawaii does not 14 preclude Oakland from recovering its alleged damages. 15 Hawaii expressly stated that under Section 4 of the Clayton Act, Hawaii could have sued in its 16 “proprietary capacity.” 405 U.S. at 262. That is exactly what Oakland is doing here. Hawaii places no 17 limitation whatsoever on what damages flow from antitrust injury to Hawaii, Oakland, or any other 18 governmental entity suing in its “proprietary capacity.” Indeed, “a local government’s proprietary 19 interests can include . . . its powers of revenue and taxation.” Yount v. Salazar, No. CV11–8171–PCT 20 DGC, 2013 WL 93372, at *11-13 (D. Ariz. Jan. 8, 2013) (finding county had standing because there was a 21 “causal connection between the loss to its tax base and its alleged inability to carry out its comprehensive 22 [land use] plan”). As in Yount, Oakland is seeking the recovery of tax revenues that are directly linked to 23 24 without first offering that interest to various entities covered by the California Land Surplus Act, which 25 includes Oakland. See Cal. Gov’t Code § 54222. 6 Defendants’ “landlord” cases involve no general prohibition of antitrust actions by landlords. Instead, 26 they conclude that the plaintiffs in those actions were not participants in the markets at issue. See R.C. Dick Geothermal Corp. v. Thermogenics, 890 F.2d 139, 146-148 (9th Cir. 1989); Innovation Marine 27 Protein, LLC v. Pac. Seafood Grp., No. 6:17–cv–00815–MC, 2018 WL 1461501, at *5-8 (D. Or. Mar. 23, 2018). 28 922705.1 14 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 24 of 35 1 the Raiders’ presence at the Coliseum property, the loss of which is proximately caused by Defendants’ 2 anticompetitive behavior.7 (FAC ¶¶ 200-210). Hawaii’s principal holding is that political entities cannot sue as parens patriae for general 3 4 damages to their citizens or economies. The Supreme Court reached this holding because “[a] large and 5 ultimately indeterminable part of the injury to the ‘general economy’ . . . , is no more than a reflection of 6 injuries to the ‘business or property’ of consumers, for which they may recover themselves” under the 7 antitrust laws. 405 U.S. at 264. However, Oakland is not suing as parens patriae and is not seeking 8 damages arising from the “general economy” of Oakland, or damages that are “a reflection of injuries to 9 the ‘business or property’ of consumers for which they may recover themselves.” The Hawaii Court’s 10 concerns about overlapping claims are simply not present here. 11 Finally, Defendants argue that Oakland cannot recover for diminution in the value of the Coliseum 12 because the FAC “largely abandons any contention that the Raiders would have continued to play in the 13 Coliseum indefinitely.” (MTD at 13). The FAC does nothing of the sort; rather, it alleges that if 14 Defendants had not violated the antitrust laws and had complied with the Relocation Policies, the Raiders 15 would have stayed in Oakland. (See, e.g., FAC ¶ 92). Further, Defendants also suggest that since the 16 Coliseum building was likely to have been renovated, or even replaced, a diminution-of-value claim is 17 barred. No authority is cited for this proposition as none exists. There is no special provision in the 18 antitrust laws for pleading damages, and general pleading is sufficient. Karseal Corp. v. Richfield Oil 19 Corp., 221 F.2d 358, 362 (9th Cir. 1955). Oakland has pleaded diminution in the value of the Coliseum 20 property, not merely the Coliseum building (see FAC ¶¶ 27, 211, 217), and under principles of proximate 21 cause, Defendants are liable for the “present decrease in the economic value of” that property related to 22 their anticompetitive conduct: i.e., their boycott of the Coliseum property as a site for hosting NFL teams. 23 Maya v. Centex Corp., 658 F.3d 1060, 1071 (9th Cir. 2011) (“[T]he portion of the diminution in the value 24 of plaintiffs’ property attributable to defendants’ acts remains. To be sure, plaintiffs would need to 25 7 Because Defendants’ conduct directly and proximately caused Oakland’s damages (see supra at 11-12), Defendants’ citations to cases (MTD at 10) discussing the general principle that a defendant may only be 26 “liable if proximately the plaintiff has suffered a loss” actually support Oakland’s claims. Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392 U.S. 481, 490 n.8 (1968); see also Ass’n of Wash. Pub. Hosp. Dists. 27 v. Philip Morris, Inc., 241 F.3d 696, 701 (9th Cir. 2001) (noting that in antirust actions, the “alleged violations…be the ‘proximate cause’ of the injury suffered”). 28 922705.1 15 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 25 of 35 1 quantify the damages resulting from decreased value in order to recover, but that is not necessary to 2 establish injury at the pleading stage”). 3 2. 4 Oakland Sufficiently Alleges A Section 1 Violation And A Relevant Market Defendants also argue that Oakland has failed to allege substantive elements of a claim under 5 Section 1 of the Sherman Act. In so doing, however, Defendants once again ignore the pleading 6 requirements applicable to such elements. First, the Ninth Circuit has made it clear that allegations of 7 market and market power are factual, and typically survive motions to dismiss: 8 There is no requirement that these [market and market power] elements of the antitrust claim be pled with specificity. An antitrust complaint therefore survives a Rule 12(b)(6) motion unless it is apparent from the face of the complaint that the alleged market suffers a fatal legal defect. And since the validity of the “relevant market” is typically a factual element rather than a legal element, alleged markets may survive scrutiny under Rule 12(b)(6) subject to factual testing by summary judgment or trial. 9 10 11 12 Newcal Indus., Inc. v. Ikon Office Solution, 513 F.3d 1038, 1045 (9th Cir. 2008) (citations omitted). 13 Indeed, on a Rule 12(b)(6) motion, the plaintiff’s alleged market should be sustained if the market is based 14 on a product (here, NFL teams) and includes consideration of all reasonable substitutes. Id. at 1045-1046. 15 As the Ninth Circuit has recognized, see infra n.8, and as Oakland has alleged (FAC ¶¶ 191-192), there 16 are no reasonable substitutes here. Second, pleading a substantive Section 1 violation requires a plaintiff to allege facts 17 18 demonstrating: “(1) a contract, combination or conspiracy among two or more persons or distinct 19 business entities; (2) by which the persons or entities intended to harm or restrain trade or commerce 20 among the several States, or with foreign nations; (3) which actually injures competition.” Kendall v. Visa 21 USA, Inc., 518 F.3d 1042, 1047 (9th Cir. 2008). See In re High Tech Emp. Antitrust Litig., 856 F. Supp. 22 2d 1103, 1115-1117 (N.D. Cal. 2012) (Kendall test met where antitrust plaintiff alleged facts 23 demonstrating “who, did what, to whom (or with whom), where, and when?”). Here, Oakland sufficiently 24 alleges who (Defendants) (see FAC ¶¶ 117-120) did what (artificially restricted the supply of NFL teams 25 in order to charge supra-competitive hosting prices) (see id. ¶¶ 124-125, 132), to whom (Oakland) (see id. 26 ¶¶ 121, 123, 128-129), where (in Oakland and at meetings of Defendants), and when (throughout 2016 27 and 2017 and in a final March 2017 vote) (id. ¶¶ 117, 120, 125-126). 28 / / / 16 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 26 of 35 1 (a) 2 Oakland Has Adequately Alleged A Market Defendants contend that there is no market for hosting NFL teams (MTD at 14-16), but thirty 3 years of pronouncements and actions by the Ninth Circuit, Congress, the Mayors’ Conference, and the 4 NFL itself clearly demonstrate otherwise. (FAC ¶¶ 70-86, 188-192). Since the 1980s, the NFL has been 5 responding to the concerns of Host Cities, first adopting the Relocation Policies proposed by Congress in 6 order to protect Host Cities, and then amending those Policies in light of the NFL’s negotiations with the 7 Mayors’ Conference. (Id. ¶¶ 78-86; see also Order at 24 (“[T]he massive public subsidies of NFL 8 stadiums and the competition among cities alleged in the [C]omplaint tend to suggest a market at least 9 similar to Oakland’s proposed definition”)). 10 Further, as noted in the FAC (¶ 191), Defendants have previously agreed that there is a market for 11 cities hosting stadium activities. In Raiders I, the NFL recognized such a market, arguing only that the 12 market should not be limited to just professional football:8 13 The L.A. Coliseum claims the relevant market is stadia offering their facilities to NFL teams (the product market) in the United States (the geographic market). The NFL agrees with this geographic market, but argues the product market involves cities competing for all forms of stadium entertainment, including NFL football teams. 14 15 16 726 F.2d at 1393. The Ninth Circuit noted that “the exceptional nature of the [NFL] industry makes 17 precise market definition especially difficult,” and thus, “market evidence, while important, should not 18 become an end in itself.” Id. at 1394. 19 Undeterred, Defendants reject the supplier/consumer understanding of the Host City marketplace 20 set forth in the FAC (the NFL supplies teams; Host Cities, as the consumers, host them) (FAC ¶¶ 18821 196), and accuse Oakland of improperly defining the market based on consumers, rather than a product. 22 This is a baseless contention. The market for hosting NFL teams is a market defined by “the products or 23 producers” of a product. Newcal Indus., 513 F.3d at 1045. (See also FAC ¶ 193 (“The relevant 24 product . . . is the presence of an NFL team” and “the producer of the product . . .[is] the NFL”). 25 8 Of course, the NFL lost its “all forms of stadium entertainment” argument before the Raiders I jury, 726 F.2d at 1394, and, the Ninth Circuit has recently reaffirmed the lack of substitutes for NFL football. See 26 In re Sunday Ticket, 933 F.3d at 1155 (“Given that professional football games have no substitutes (as fans do not consider NFL games to be comparable to other sports or forms of entertainment) . . . , the 27 defendants in this case have effective control over the entire market for telecasts of professional football games”) (emphasis added). 28 922705.1 17 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 27 of 35 1 Amazingly, Defendants actually admit that “Defendants do not compete with each other in the alleged 2 relevant market of ‘hosting NFL teams.’” (MTD at 14). Of course they don’t. As alleged in the FAC, 3 Defendants have artificially restricted the number of teams in the marketplace so that they will not have to 4 compete for “stadia or other services for professional football.” (Id. at 15; see also FAC ¶¶ 197-198). 5 Although the NFL Clubs are supposed to be competitors in the market for Host Cities (FAC ¶ 188), 6 because of Defendants’ collusion, revenue sharing, and insurmountable barriers to entry (id. ¶¶ 198-199, 7 220, 223), Defendants look like competitors only on the field. Defendants also falsely contend that Oakland did not address the “SSNIP” test discussed in Saint 8 9 Alphonsus Med. Ctr.-Nampa Inc. v. St. Luke’s Health Sys. Ltd., 778 F.3d 775, 784 (9th Cir. 2015). Here, 10 Oakland’s defined geographic market – the United States (FAC ¶¶ 194-196) – meets the SSNIP test 11 because there are no NFL teams outside of the United States. In fact, the only professional football teams 12 in the world are in the NFL.9 13 (b) 14 Oakland Has Adequately Pled A Price-Fixing Scheme Defendants next argue that their decision to limit the NFL to 32 teams does not necessarily amount 15 to a price-fixing scheme. (MTD at 16-17). That is true: although the antitrust laws favor markets in 16 which supply is determined by demand, NCAA, 468 U.S. at 107,10 it is at least theoretically possible that a 17 group of competitors could constrain supply in a market and not, as a result, charge or seek to charge 18 supra-competitive prices. However, that is not what happened here. 19 As the FAC alleges, Defendants restrain the supply of teams so that they can demand supra- 20 competitive prices from Host Cities. (FAC ¶¶ 36-38, 40-41, 133-137). Indeed, without Defendants’ 21 artificial barriers to entry, many more professional football teams and Host Cities would exist in the 22 23 24 25 26 27 28 9 As in their motion to dismiss the Complaint (see Defendants’ Mot. to Dismiss, ECF No. 41, at 14), Defendants cite Hicks v. PGA Tour, Inc., 897 F.3d 1109, 1121 (9th Cir. 2018) and StubHub, Inc. v. Golden State Warriors, LLC, No. C 15-1436 MMC, 2015 WL 6755594, at *3 (N.D. Cal. Nov. 5, 2015) (see MTD at 16), but both of those cases involved attempts to manufacture a market to fit an antitrust claim. In Hicks, a group of golf caddies tried to carve up golf advertisement into nonsensical “markets” to suit their particular litigation, and in StubHub, the plaintiff attempted to argue that there were different markets for the same tickets based on where they were purchased. 10 (See also Order at 14 n.7 (“[C]ourts have recognized that restrictions on supply can have an equivalent effect to fixing prices”) (citing Westinghouse Elec. Corp. v. Gulf Oil Corp., 588 F.2d 221, 226 (7th Cir. 1978)). 18 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 28 of 35 1 United States, and Defendants would not be able to charge supra-competitive prices. (Id. ¶¶ 39, 42-49, 2 138). As the Supreme Court has held, the fact that this supply-restraining conduct did not set specific 3 prices is immaterial. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 222-223 (1940). 4 Oakland agrees that it is not the purpose of the antitrust laws to “determine the appropriate size of 5 a sports league.” (MTD at 18). However, it is also not Defendants’ province to make that determination 6 when the purpose of their decision is an anticompetitive restraint of trade. Professors Hovenkamp and 7 Areeda, whom Defendants cite (see id. at 17), make it clear that sports leagues’ exclusionary decisions are 8 illegitimate when they “are intended to reinforce price-fixing or another output limitation.” Herbert 9 Hovenkamp & Phillip E. Areeda, FUNDAMENTALS OF ANTITRUST LAW, § 22.04[a] (Supp. 2014); see also 10 United States v. Realty Multi-List, Inc., 629 F.2d 1351, 1385-1386 (5th Cir. 1980) (“[T]he unrestricted 11 power to set an entrance fee which is unrelated to either the cost of the service provided or the cost of 12 maintaining the service as a going concern is the power to exclude, and hence to destroy competition”). 13 The cases that Defendants cite (see MTD at 17) are inapposite for several reasons, but principally 14 because none of the plaintiffs in those cases alleged any harm to competition. See Seattle Totems Hockey 15 Club, Inc. v. NHL, 783 F.2d 1347, 1350 (9th Cir. 1986); Deesen v. Prof’l Golfers’ Ass’n of Am., 358 F.2d 16 165, 171 (9th Cir. 1966); Mid-S. Grizzlies v. NFL, 720 F.2d 772, 787 (3d Cir. 1983). Put another way, in 17 each of those cases, plaintiffs failed to plead how denying one more team, or one more player, a space in a 18 league harmed competition in those leagues. Here, by contrast, Oakland has set forth significant 19 allegations demonstrating the harm to competition caused by Defendants’ constraint on the supply of NFL 20 teams and the price-fixing that arises from that “output limitation.” (FAC ¶¶ 39-41, 49-50, 127, 138, 14521 146, 149-151, 197-199) 22 In short, Defendants cannot limit the number of NFL teams for the purpose of charging 23 anticompetitive prices in the hosting market. That is the very conduct that is alleged in the FAC, and 24 Oakland’s plausible and well-supported allegations control on Defendants’ Rule 12(b)(6) motion. In re 25 NCAA Student-Athlete Name & Likeness Lic. Litig., 990 F. Supp. 2d 996, 1005 (N.D. Cal. Oct. 25, 2013) 26 (“Although it is possible that the NCAA’s ban on student-athlete pay serves some procompetitive purpose 27 . . . , Plaintiffs’ plausible allegations to the contrary must be accepted as true at the pleading stage”). (See 28 also Order at 16 n.9 (noting that an “entity seeking to attract [an NFL team] . . . might experience a 922705.1 19 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 29 of 35 1 cognizable antitrust injury if . . . the [relocation fee] is in fact arbitrary and not tied to procompetitive 2 goals”). (c) 3 Oakland Has Adequately Alleged A Group Boycott Although this Court expressed skepticism about Oakland’s original allegations of group 4 5 boycott/refusal to deal, the FAC’s new allegations more than sufficiently plead a plausible claim for a 6 group boycott/refusal to deal (governed by a rule of reason analysis). As the FAC alleges, the NFL and its 7 Clubs’ collective decision to remove a team from, and deny a new expansion franchise to, a Host City 8 constitutes a refusal to deal with, or a group boycott of, that Host City: 9 Running a permanently closed shop [league] is an optional feature designed to benefit incumbents and not in any way essential to maintaining a sporting league. Thus, aspects of league behavior toward their Host Cities that depend on a permanently closed shop may violate the first mandate of antitrust law, § 1 of the Sherman Act, which prohibits unreasonable agreements between competitors to restrain trade. Because existing teams determine whether new entry will be allowed, a threat by an individual team to relocate may comprise an implicit threat of a concerted boycott. . . . . [W]hen several economic actors agree between themselves to shut out rivals or to refuse to deal with customers or suppliers, except on agreed terms, such concerted action generally constitutes an unlawful horizontal restraint, specifically a collective boycott . . . . 10 11 12 13 14 15 (FAC ¶ 140 (quoting David Haddock et al., League Structure & Stadium Rent-Seeking – The Role of 16 Antitrust Revisited, 65 FLA. LAW REV. 1, 3-7, 49-50 (2013)). That the boycott is of a consumer, and not a 17 competitor, is of no moment. See St. Paul Fire Marine Ins. Co. v. Barry, 438 U.S. 531, 544 (1978) 18 (defining group boycotts and stating that “the Sherman Act makes it an offense for [businessmen] to agree 19 among themselves to stop selling to particular customers”). Oakland’s allegations set forth a plausible 20 boycott case. 11 (FAC ¶¶ 52-56, 80, 138-144). 21 C. OAKLAND HAS SUFFICIENTLY ALLEGED A BREACH CLAIM 22 In a continuation of Defendants’ broken promises to Congress, the Mayors’ Conference, and Host 23 Cities (see id. ¶¶ 70-92), Defendants effectively argue that, despite their numerous past representations 24 regarding the good faith that would accompany relocation decisions and the loyalty that would be paid to 25 existing Host Cities, the Relocation Policies are not worth the paper they are written on. Defendants claim 26 11 The NFL has conceded that relocation decisions are collective decisions made by all NFL Clubs. (FAC ¶ 80 (“Control of team location is a matter for the League members to determine jointly . . .”) (quoting id. 27 Ex. 3 at 1)). Thus, Defendants’ argument that the Raiders unilaterally decided to relocate to Las Vegas is without merit. (MTD at 18). 28 922705.1 20 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 30 of 35 1 that nobody can enforce those Policies except Defendants themselves and, as the FAC establishes, 2 Defendants have absolutely no incentive to do so (see, e.g., FAC ¶¶ 53-56). The effect of this revisionist 3 argument is that no one would have standing to sue under the Relocation Policies. The Court should 4 reject Defendants’ attempt to re-cast the facts and the allegations in the complaint in order to insulate their 5 anticompetitive behavior from any further legal challenges. Not surprisingly, California law does not 6 support this self-serving effort.12 7 1. 8 The Relocation Policies Are Part Of An Enforceable Contract The NFL Constitution and the Relocation Policies, collectively, constitute an enforceable contract 9 among the NFL and the NFL Clubs. (Id. ¶ 155). The Relocation Policies are promulgated pursuant to the 10 Commissioner’s authority to “establish policy and procedure” under Article 8.5 of the NFL Constitution 11 (see id. Ex. 2 at 1), which – along with the NFL bylaws – the Raiders concede “constitute a contract to 12 which all member clubs agreed.” Oakland Raiders v. NFL, 131 Cal. App. 4th 621, 639 (2005). As the 13 NFL Constitution and bylaws bind the Clubs to the Commissioner’s policies, the Relocation Policies 14 established under Article 8.5 are a valid part of that contract. See St. Louis, 2017 WL 6885089, at *1 15 (finding Relocation Policies constitute an enforceable contract). The Relocation Policies are not a “promise to consider” as Defendants argue (MTD at 19), but 16 17 even if they could be construed as such, the Policies would still considered an enforceable contract under 18 Defendants’ own cited cases. For example, the court in Ladas v. Cal. State Auto. Ass’n, 19 Cal. App. 4th 19 761, 771 (1993) noted that a “promise to consider” would be enforceable where it was sufficiently certain 20 that the parties’ intention can be ascertained. Here, as alleged in the FAC (¶¶ 75-83), Defendants’ 21 intentions and obligations under the Relocation Policies were clearly understood. Amaral v. Cintas Corp. 22 No. 2, 163 Cal. App. 4th 1157, 1192 (2008). 23 / / / 24 12 Accepting Defendants’ interpretation of the Policies would also run afoul of the “fundamental rule that 25 courts must interpret the allegations and factual disputes in favor of the plaintiff at the pleading stage.” Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 1014 (9th Cir. 2018). Further, the Missouri court 26 overseeing the action by the City of St. Louis against Defendants for the relocation of the Rams has rejected the very same Relocation Policy arguments made by Defendants here using the same pleading 27 standard. See St. Louis Reg’l Convention and Sports Complex Auth. v. NFL (“St. Louis”), No. 1722CC00976, 2017 WL 6885089, at *1 (Mo. Cir. Dec. 27, 2017). 28 922705.1 21 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 31 of 35 1 2. Oakland Is A Third-Party Beneficiary To The Relocation Policies Under California’s third-party beneficiary doctrine, “a third party . . . may bring a breach of 2 3 contract action against a party to the contract” if it alleges facts sufficient to show: 4 (1) that it is likely to benefit from the contract, . . . (2) that a motivating purpose of the contracting parties is to provide a benefit to the third party, and . . . (3) that permitting the third party to bring its own breach of contract action against a contracting party is consistent with the objectives of the contract and the reasonable expectations of the contracting parties. 5 6 7 Goonewardene v. ADP, LLC, 434 P.3d 124, 126-127 (Cal. 2019). The “motivating purpose” element has 8 been referred to as a “requirement that there be ‘an intent to benefit’ the third party,” id. at 133, and in 9 evaluating this “motive” element, courts consider “the language of the contract and all of the relevant 10 circumstances under which the contract was entered into,” id. at 134 (citation and quotations omitted). 11 The FAC sufficiently alleges the elements required to sue as a third-party beneficiary. First, as this Court has noted, “Oakland would benefit from policies that restrict the ability of the 12 13 Raiders to leave Oakland for a new city.” (Order at 25; see also FAC ¶¶ 165-70). Defendants do not 14 argue otherwise. 15 Second, the express contract language reflects an intent to benefit Host Cities. For example, the 16 Relocation Policies repeatedly refer to “home territories” and “home communities” and “obligate” NFL 17 Clubs “to work diligently and in good faith to obtain and maintain suitable stadium facilities in their home 18 territories and to operate in a manner that maximizes fan support in their current home community.” 19 (FAC ¶ 89 (quoting id. Ex. 2 at 1 (emphases added)). Prior to any proposed relocation, an NFL Club is 20 required to provide the Commissioner with a supporting “Statement of Reasons” that “must address each 21 of the factors outlined in” the Relocation Policies, several of which expressly require consideration of 22 conditions in the Club’s “current community.” (Id. ¶ 167 (quoting id. Ex. 2 at 4)). The NFL must notify 23 “interested parties” of any relocation possibility, including “governmental and business representatives of 24 . . . the incumbent community” and “provide those parties with an opportunity to provide oral and written 25 comments regarding the proposed transfer.” (Id. Ex. 2 at 2 (emphasis added)). This “home community” 26 language provides an express benefit to Host Cities – and because Defendants “made . . . promise[s] 27 which, if performed, would have benefitted [Host Cities],” Defendants “are presumed to intend the 28 22 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 32 of 35 1 consequences of a performance of the contract.” Provost v. Regents of Univ. of Cal., 135 Cal. Rptr. 3d 2 591, 601 (Cal. Ct. App. 2011).13 3 Of course, the circumstances surrounding the adoption of the Relocation Policies provide 4 significant and compelling evidence of an intent to benefit Host Cities. As the FAC makes clear, 5 Defendants adopted the Relocation Policies in an express effort to address Host Cities’ concerns about the 6 relocation process. The first iteration of the Relocation Policies was lifted directly from a bill drafted by 7 Senator Slade Gorton to address his “paramount concern” of “the protection of our cities, both cities 8 which have professional sports franchises and wish to keep them, and cities which do not now have a 9 franchise and wish to gain one.” (FAC ¶¶ 74-75 (emphases added)). When the Relocation Policies were 10 amended in 1999 after the Statement of Principles was negotiated with the Mayors’ Conference, an NFL 11 executive expressly stated that “the amended [Relocation Policies] protect the interest of the cities” and 12 “establish an orderly process [for considering team relocations], ensuring that municipal interests will be 13 heard and addressed.” (Id. ¶ 81 (emphases added)).14 14 Defendants suggest that benefitting Host Cities cannot be a motivating purpose of the contract 15 because Defendants were motivated by “business interests” and “the League’s collective interests.” 16 (MTD at 22). Specifically, Defendants refer to the fact that they purportedly adopted the Relocation 17 Policies in order to protect themselves from antitrust liability and federal regulation. However, California 18 law requires only that the intent to benefit the third party be “among the motivating purposes of a 19 contract;” it need not be the sole purpose. Goonewardene, 434 P.3d at 138 (emphasis added). Because 20 Oakland alleges facts sufficient to show that one of Defendants’ primary motivations was “to benefit the 21 [H]ost [C]ity,” Oakland has satisfied this element. (Tr. of Oral Arg., ECF No. 65, at 39:6-9). See also 22 23 24 25 26 27 13 Unsurprisingly, Defendants completely ignore the “home community” language in the Relocation Policies. Instead, Defendants try to argue that the term “home territory” is not a reference to a Host City, because the term “home territory” supposedly “encompasses a geographic region spanning a 75-mile radius.” (MTD at 20-21). But this argument ignores the fact that the NFL Constitution expressly defines a “home territory” to include “the city in which [an NFL] club is located.” (FAC, Ex. 3, art. 4, § 4.1 (emphasis added)). Thus, Oakland is an express beneficiary of the contract because it is plainly a “member of a class…for whose benefit [the contract] was made” (i.e., Host Cities). Spinks v. Equity Residential Briarwood Apartments, 171 Cal. App. 4th 1004, 1022-23 (2009). 14 Since Host Cities are intended beneficiaries, the cases that Defendants cite involving incidental beneficiaries are inapposite. See, e.g., Klamath Water Users Protective Ass’n v. Patterson, 204 F.3d 1206, 1212 (9th Cir. 1999); Martinez v. Socoma Cos., 521 P.2d 841, 847 (Cal. 1974). 28 23 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 33 of 35 1 Reyes v. Saxon Mortg. Servs., No. 09cv1366 DMS (WMC), 2009 WL 3738177, at *2 (S.D. Cal. Nov. 5, 2 2009). It would be a distortion of California law if Defendants’ fear of liability could now be used to 3 protect them from that same liability. At the very least, the FAC raises questions of fact that cannot be 4 resolved at this juncture. Third, in determining whether “third party enforcement [will] be consistent with ‘the objectives of 5 6 the contract,’” courts consider “the objectives of the enterprise embodied in the contract, read in light of 7 the surrounding circumstances.” Goonewardene, 434 P.3d at 133 (citation omitted). Here, at the time the 8 Relocation Policies were amended, an NFL executive expressly stated that the NFL “wish[es] to maintain 9 the stability of economically viable franchises and to ensure a fair process to consider requests for 10 franchise relocations.” (FAC ¶ 81). The NFL executive also stated that “[t]he amendments [to the 11 Relocation Policies] . . . are the direct result of . . . discussions” reflected in the Statement of Principles 12 jointly issued by the NFL and the Mayors’ Conference, which represents Host Cities. (Id.) In the 13 Statement of Principles, the NFL stated that it was “committed to stable team-community relations” 14 because “[s]tability is good for fans, good for home cities, and good for professional sports.” (FAC ¶ 80 15 (quoting id. Ex. 3 at 1 (emphasis added)).15 The NFL also acknowledged that Host Cities make a “substantial and valuable financial, 16 17 psychological and emotional investment” in NFL teams and that there is a “public interest to enjoy the 18 direct and indirect benefits of having a professional sports franchise,” such as “jobs, revenues, and other 19 local economic development” generated by an NFL team. (Id.) The NFL conceded that “the League 20 should have . . . the obligation to follow a set process before the relocation of a team is permitted to 21 occur.” (Id.) Thus, the “surrounding circumstances” make clear that Host City enforcement of the 22 Relocation Policies is consistent with the “objectives of the enterprise” embodied in those Policies. 23 Goonewardene, 434 P.3d at 133. 24 15 Defying third-party beneficiary law, Defendants argue that allowing Host Cities to sue is “not 25 necessary to effectuate the objectives of the contract” because the Relocation Policies “lay out a process to resolve whether a proposed relocation satisfies the NFL teams’ business interests,” and the Statement of 26 Principles supposedly “affirms the importance of the League’s own internal processes.” (MTD at 23-24). In other words, “don’t worry, we will take care of things by ourselves.” Of course, third-party beneficiary 27 principles exist because contracting parties – even where they have expressly promised a benefit to a third party – sometimes breach their promise and fail to abide by the contract. 28 922705.1 24 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 34 of 35 1 3. 2 Oakland Has Alleged A Viable Claim Under The Relocation Policies As a third-party beneficiary, Oakland has standing to sue where, as here, the contract is breached. 3 See Id. at 126. Defendants breached the Relocation Policies because they ignored those Policies, and, 4 among other things, did not even try to fulfill their obligations to “work diligently and in good faith to 5 obtain and maintain suitable stadium facilities in their home territor[y]” or “operate in a manner that 6 maximizes fan support in their current home community.” (FAC ¶¶ 167, 169, 182). Instead, Defendants 7 “colluded to facilitate the Raiders’ move before and during the time period in which negotiations” with 8 Oakland were taking place. (Id. ¶ 185; see also id. ¶¶ 113-29). These breaches caused Oakland to suffer 9 damages, as detailed in the FAC. (Id. ¶¶ 187, 200-217). In short, Oakland has alleged sufficient facts to 10 satisfy the “essential elements” of a breach of contract claim. Hickcox-Huffman v. US Airways, Inc., 855 11 F.3d 1057, 1062 (9th Cir. 2017). OAKLAND’S UNJUST ENRICHMENT CLAIM IS SUFFICIENTLY PLED 12 D. 13 Oakland has also sufficiently alleged facts to support its alternative claim for unjust enrichment. A 14 claim for unjust enrichment is understood as one for restitution. McNeary-Calloway v. JP Morgan Chase 15 Bank, N.A., 863 F. Supp. 2d 928, 964 (N.D. Cal. 2012) (to state a restitution claim, a plaintiff “must plead 16 ‘receipt of a benefit and the unjust retention of the benefit at the expense of another’”). Here, the FAC 17 alleges that Oakland invested millions of dollars to attract, retain, and support the Raiders. (FAC ¶¶ 20018 217). Oakland made those investments with the understanding that: (a) Defendants would comply with 19 the Relocation Policies, which include an obligation to negotiate in good faith; (b) Defendants would 20 support Oakland as the Host City for the Raiders; and (c) Oakland would recoup its investments through 21 the revenues generated by the Raiders’ continued presence in Oakland. (Id. ¶¶ 73-92, 105-138, 237-242). 22 Further, Plaintiff is permitted to simultaneously advance unjust enrichment and breach of contract claims 23 in the alternative at the pleading stage. Hawthorne v. Umpqua Bank, No. C–11–6700 YGR, 2012 WL 24 1458194, at *3 (N.D. Cal. Apr. 26, 2012); Fed. R. Civ. Proc. 8(d)(2), 8(a)(3). Oakland’s claim for unjust 25 enrichment should not be dismissed. 26 IV. CONCLUSION 27 Based on the foregoing, Defendants’ Motion to Dismiss should be denied in its entirety. 28 / / / 25 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1 Case 3:18-cv-07444-JCS Document 74 Filed 12/10/19 Page 35 of 35 1 DATED: December 10, 2019 2 3 By: 4 5 6 7 8 9 10 /s/ Maria Bee MARIA BEE BARBARA J. PARKER (Bar No. 69722) bparker@oaklandcityattorney.org MARIA BEE (Bar No. 167716) mbee@oaklandcityattorney.org ERIN BERNSTEIN (Bar No. 231539) ebernstein@oaklandcityattorney.org OAKLAND CITY ATTORNEY One Frank Ogawa Plaza, 6th Floor Oakland, California 94612 Telephone: (510) 238-3601 Facsimile: (510) 238-6500 11 12 13 14 By: /s/ James W. Quinn JAMES W. QUINN JAMES W. QUINN (pro hac vice) jquinn@bafirm.com DAVID BERG (pro hac vice) dberg@bafirm.com MICHAEL M. FAY (pro hac vice) mfay@bafirm.com JENNY H. KIM (pro hac vice) jkim@bafirm.com CHRIS L. SPRENGLE (pro hac vice) csprengle@bafirm.com BRONWYN M. JAMES (pro hac vice) bjames@bafirm.com EMILY BURGESS (pro hac vice) eburgess@bafirm.com BERG & ANDROPHY 120 West 45th Street, 38th Floor New York, New York 10036 Telephone: (646) 766-0073 Facsimile: (646) 219-1977 15 By: 16 17 18 19 20 21 22 23 24 /s/ Bruce L. Simon BRUCE L. SIMON CLIFFORD H. PEARSON (Bar No. 108523) cpearson@pswlaw.com DANIEL L. WARSHAW (Bar No. 185365) dwarshaw@pswlaw.com MICHAEL H. PEARSON (Bar No. 277857) mpearson@pswlaw.com MATTHEW A. PEARSON (Bar No. 291484) mapearson@pswlaw.com PEARSON, SIMON & WARSHAW, LLP 15165 Ventura Boulevard, Suite 400 Sherman Oaks, California 91403 Telephone: (818) 788-8300 Facsimile: (818) 788-8104 Attorneys for Plaintiff City of Oakland BRUCE L. SIMON (Bar No. 96241) bsimon@pswlaw.com BENJAMIN E. SHIFTAN (Bar No. 265767) bshiftan@pswlaw.com PEARSON, SIMON & WARSHAW, LLP 350 Sansome Street, Suite 680 San Francisco, California 94104 Telephone: (415) 433-9000 Facsimile: (415) 433-9008 25 26 27 28 26 3:18-cv-07444-JCS PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT 922705.1